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Zhongyan Technology Co., Ltd.'s (SZSE:003001) Financials Are Too Obscure To Link With Current Share Price Momentum: What's In Store For the Stock?

Zhongyan Technology Co., Ltd.'s (SZSE:003001) Financials Are Too Obscure To Link With Current Share Price Momentum: What's In Store For the Stock?

中岩大地科技股份有限公司(SZSE:003001)的财务数据过于模糊,无法与当前股价势头联系起来:股票的未来走势如何?
Simply Wall St ·  09/29 22:03

Zhongyan Technology (SZSE:003001) has had a great run on the share market with its stock up by a significant 36% over the last three months. However, we decided to pay attention to the company's fundamentals which don't appear to give a clear sign about the company's financial health. Specifically, we decided to study Zhongyan Technology's ROE in this article.

中岩大地(SZSE:003001)最近在股市表现出色,股价在过去三个月中显著上涨了36%。然而,我们决定关注公司的基本面,并没有给出公司财务健康状况的明确迹象。具体来说,我们决定在本文中研究中岩大地的roe。

Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.

股东权益回报率(roe)是一种关键指标,用于评估公司管理层如何有效利用公司资本。更简单地说,它衡量了公司相对股东权益的盈利能力。

How Do You Calculate Return On Equity?

怎样计算ROE?

The formula for return on equity is:

权益回报率的计算公式是:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

净资产收益率 = 净利润(从持续经营中获得)÷ 股东权益

So, based on the above formula, the ROE for Zhongyan Technology is:

因此,根据上述公式,中岩大地的roe为:

2.7% = CN¥32m ÷ CN¥1.2b (Based on the trailing twelve months to June 2024).

2.7% = 3.2亿元 ÷ 120亿元(基于截至2024年6月的过去十二个月)。

The 'return' is the profit over the last twelve months. So, this means that for every CN¥1 of its shareholder's investments, the company generates a profit of CN¥0.03.

“回报”是过去12个月的利润。这意味着,对于每一元股东投资,该公司可以获得0.03元的利润。

Why Is ROE Important For Earnings Growth?

ROE为什么对净利润增长很重要?

So far, we've learned that ROE is a measure of a company's profitability. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.

到目前为止,我们已经了解到roe是衡量公司盈利能力的指标。我们现在需要评估公司重新投资或“保留”的利润量,从而给我们提供有关公司增长潜力的想法。其他条件相同的情况下,roe和利润保留率均较高的公司通常是增长率比没有这些特征的公司高的公司。

A Side By Side comparison of Zhongyan Technology's Earnings Growth And 2.7% ROE

A Side By Side comparison of Zhongyan Technology's Earnings Growth And 2.7% ROE

It is quite clear that Zhongyan Technology's ROE is rather low. Even when compared to the industry average of 6.8%, the ROE figure is pretty disappointing. For this reason, Zhongyan Technology's five year net income decline of 54% is not surprising given its lower ROE. However, there could also be other factors causing the earnings to decline. Such as - low earnings retention or poor allocation of capital.

It is quite clear that Zhongyan Technology's ROE is rather low. Even when compared to the industry average of 6.8%, the ROE figure is pretty disappointing. For this reason, Zhongyan Technology's five year net income decline of 54% is not surprising given its lower ROE. However, there could also be other factors causing the earnings to decline. Such as - low earnings retention or poor allocation of capital.

That being said, we compared Zhongyan Technology's performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 7.0% in the same 5-year period.

That being said, we compared Zhongyan Technology's performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 7.0% in the same 5-year period.

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SZSE:003001 Past Earnings Growth September 30th 2024
SZSE:003001 Past Earnings Growth September 30th 2024

Earnings growth is an important metric to consider when valuing a stock. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. Doing so will help them establish if the stock's future looks promising or ominous. Is Zhongyan Technology fairly valued compared to other companies? These 3 valuation measures might help you decide.

收益增长是在对股票进行估值时要考虑的重要指标。投资者应该尝试确定预期的收益增长或下降,无论情况如何,是否已有所体现。这样做将有助于他们确定股票的未来是看涨还是悲观。与其他公司相比,中岩大地的估值是否公平?这三个估值指标可能会帮助您做出决策。

Is Zhongyan Technology Making Efficient Use Of Its Profits?

中岩大地是否有效地利用其利润?

Zhongyan Technology's low three-year median payout ratio of 24% (or a retention ratio of 76%) over the last three years should mean that the company is retaining most of its earnings to fuel its growth but the company's earnings have actually shrunk. The low payout should mean that the company is retaining most of its earnings and consequently, should see some growth. So there could be some other explanations in that regard. For example, the company's business may be deteriorating.

中岩大地过去三年的中位数低至24%的派息比率(或保留比率为76%)应意味着公司正在保留大部分收益以促进其增长,但公司的盈利实际上有所缩水。低派息应该意味着公司正在保留大部分收益,因此应该会有一些增长。所以在这方面可能会有一些其他解释。例如,公司的业务可能正在恶化。

Moreover, Zhongyan Technology has been paying dividends for three years, which is a considerable amount of time, suggesting that management must have perceived that the shareholders prefer consistent dividends even though earnings have been shrinking.

此外,中岩大地已经连续三年支付股息,这是相当长的时间,表明管理层必须已经认识到股东更喜欢稳定的股息,尽管盈利一直在缩水。

Conclusion

结论

Overall, we have mixed feelings about Zhongyan Technology. While the company does have a high rate of profit retention, its low rate of return is probably hampering its earnings growth. Wrapping up, we would proceed with caution with this company and one way of doing that would be to look at the risk profile of the business. Our risks dashboard would have the 3 risks we have identified for Zhongyan Technology.

总体而言,我们对中岩大地存在着矛盾的感觉。虽然公司利润保留率较高,但低回报率可能阻碍了其盈利增长。最后,我们会谨慎对待这家公司,而看业务风险概况是一种做法。我们的风险特斯拉-仪表会列出我们为中岩大地确定的3个风险。

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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这篇文章是Simply Wall St的一般性文章。我们根据历史数据和分析师预测提供评论,只使用公正的方法论,我们的文章并不意味着提供任何金融建议。文章不构成买卖任何股票的建议,也不考虑您的目标或您的财务状况。我们的目标是带给您基本数据驱动的长期关注分析。请注意,我们的分析可能不考虑最新的价格敏感公司公告或定性材料。Simply Wall St没有任何股票头寸。

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